## Facts

- Apache Exploration Corporation applied to the Wyoming Oil and Gas Conservation Commission to establish 80-acre drilling units for the North Rainbow Ranch Field in Campbell County, Wyoming.
- Larsen and other royalty-interest owners objected to the proposed unit orientation and configuration, asserting it would deprive them of correlative rights to a fair share of production.
- The Commission held hearings and issued an order creating 80-acre drilling units, stating generally that the units would protect correlative rights and prevent or assist in preventing waste under the Wyoming Oil and Gas Conservation Act.
- The order described only in general terms the approximate recoverable oil for the pool as a whole.
- The order did not address the objectors’ correlative-rights claims, did not state recoverable oil by unit, and did not determine the amount recoverable without waste.
- The district court affirmed the Commission’s order on judicial review, and the royalty owners appealed.

## Issues

1. Whether the Commission’s order establishing 80-acre drilling units was supported by adequate findings and evidence showing the units were required to protect correlative rights or prevent (or assist in preventing) waste under the Wyoming Oil and Gas Conservation Act.
2. Whether a conclusory recitation that an order protects correlative rights and prevents waste satisfies the Commission’s duty to make findings sufficient for judicial review.

## Decision

- The Wyoming Supreme Court reversed the district court’s judgment affirming the Commission.
- The Court held the spacing order invalid because the Commission failed to make sufficiently specific findings demonstrating that 80-acre units, in the selected configuration, were required to protect correlative rights or prevent waste.
- The Court remanded for further proceedings so the Commission could develop an adequate factual basis and enter an order with specific findings.

## Legal Principles

- When an agency acts under statutory authority conditioned on necessity (e.g., “required” to protect correlative rights or prevent waste), it must make specific findings of basic fact and explain how those facts support its ultimate conclusions.
- Findings that merely repeat statutory standards, without tying the evidence to the unit size and configuration adopted, are inadequate for meaningful judicial review.
- In oil-and-gas conservation regulation, adequate findings should address the relationship between estimated recoverable reserves, recovery without waste, and the effect of spacing/orientation on each owner’s opportunity to obtain a fair share.
- Substantial-evidence review presupposes findings detailed enough to permit a court to evaluate whether the agency’s conclusions follow from the record.

## Conclusion

The court required the Commission to justify spacing decisions with concrete, reviewable findings showing how the chosen drilling-unit size and layout prevent waste and protect correlative rights, and it set aside an order that relied on generalized statutory assertions.


Larsen v. Oil & Gas Conservation Comm’n, 569 P.2d 87 (Wyo. 1977)